Agents hope rate cut will bring back home buyers

House prices are slumping as households repay debts and resist making big purchases, according to the Reserve Bank of Australia.

In its monetary policy statement on Friday, the central bank said household borrowing had fallen below the average rate of the past decade and was in line with incomes.

More than 1100 properties will be auctioned in Sydney and Melbourne this weekend and the real estate industry is hoping that sluggish sales volumes will increase after this week’s interest rate cut.

House prices are estimated to have fallen 3.5 per cent over the year, reducing household net worth. Auction clearance rates in Sydney and Melbourne were below average and housing turnover was low.

Investment in new dwellings had weakened for detached houses, but approvals for apartments had risen.

Ray White Group chairman
Brian White
said there had been no improvement in sales volumes despite the arrival of the peak real estate selling season. Group turnover in October was $2.1 billion, lower than he had hoped.